Many people call this saving, but usually they are saving for something, which means they plan to spend this hard earned money at some point. So in fact you aren’t keeping your money at all! Keeping what you earn is different, it means literally keeping the money and never spending it. Have I lost you? What’s the point of that you say? Well how do you expect to make money if you keep spending it?
The Best Way to Make Money
Keeping what you earn is the best way for anyone to make money. It is very easy to prove this, just look at your retirement fund. This money keeping strategy is enforced by the government so that you have some money to live on when you stop working. This money is also invested for you by your superannuation fund so that you will have more than just what was kept for you. Over the course of your working life, this can add up to a nice amount. So why do you need to keep more money? Well to start with you don’t get your retirement fund until you are 65 in Australia and if you are anything like me, you don’t really want to work for that long! In addition to that, you might get a nice amount, but it still isn’t going to be a lot.
I’m no political fanatic, but if the government thinks that keeping your money is so important that they make you do it and it makes you money, doesn’t it sound like a good place to start?
Yeah, I know! That is one lame money keeping strategy, but it is safe and it works. Fortunately for you however, you can do anything you want with the money you keep for yourself, exciting right?
So the retirement fund is being looked after and if you don’t mind the idea, you can add to this yourself with the money you keep, but keep in mind that you won’t get it back until you reach retirement age. If this idea doesn’t appeal to you, then you could leave in a bank earning interest. Pretty much every bank will have a fun calculator that you can use to show how much more you will have over time, based on the money you are keeping and a predefined interest rate. If this appeals to you, then go and have a play with one on your bank website now – I’ll wait….
If you are chasing bigger returns, you could try investing in managed funds or shares yourself, or maybe in property, but unless you are a financial adviser or real estate agent we are now starting to get into foreign territory. by all means go for it, but do your homework and seek out the right people to get the right advice.
So How Much Should I Keep?
This is the big question and to be honest I don’t have a good answer other than saying as much as you can. There are some great blogs around (my favourites include Get Rich Slowly and The Simple Dollar) that will give you a more definitive answer than mine and I’d rather not limit you to a number, but if you are not keeping at least 10% of your earnings, then your wealth creation journey is going to be a slow one. The reason I say as much as you can is because the more you keep, the faster your wealth will grow and the faster it grows, the more motivated you will become. This motivation is important as it will help you fight against impatience and improve your self control which are the two bad guys getting in your way.
At the end of the day, wealth creation needs to be about you. Keep as much as you can, make it work and watch it grow. It’s really quite magic!